Attracting new customers to your business is five times more expensive than retaining current ones. Furthermore, your existing customers are 50 percent more willing to try out your new product and are 31 percent more likely to buy it than new customers.
Research suggested that improving the customer retention rate of your business boosts sales by 25 to 95 percent. Whether your company already has an existing loyalty program or not, you understand how valuable the customer loyalty program is for your business.
Although an often neglected aspect of business in the past years, nowadays companies all over the world are improving their loyalty programs or membership marketing more than ever. Businesses have realized the value of keeping existing customers loyal to their enterprise.
With the outbreak of the Coronavirus pandemic, companies are all the keener on building trust with customers in order to retain them. By repeated good service and providing value, existing customers will be more eager to do repeat business with you.
Humans are creatures of habit. Banking on this reality, businesses can retain more existing customers and attract new ones by providing strong customer loyalty programs. Customers love the perks and privileges that come with being loyal to a brand as well.
It is understandable for businesses to expand their customer base. Nonetheless, there are many upsides, financial, and non-financial that comes with investing in keeping your existing customer base happy. For us to further understand its value, let us learn more about customer loyalty and why it is important.
What Is Customer Loyalty
Customer loyalty means the gauge of the likelihood of a customer doing repeat business with your company. Customer loyalty is the by-product of customer satisfaction to the overall value of your business’s goods or service and customer experience.
There are many different membership marketing strategies or loyalty programs companies can implement in order to boost customer loyalty to their business. Companies may use the simple point-based system of rewards or charge upfront fees to enjoy VIP benefits.
Why Is Customer Loyalty Important
According to statistics, the majority of companies today have some loyalty program. Since 2012, loyalty program membership in the US grew up to 26.7 percent. If these numbers are still not enough to convince you why your business needs to embrace loyalty programs, consider the following benefits.
Retain Existing Customers
The major goal of customer loyalty programs is to keep existing customers. A company’s loyalty program serves as an avenue for the business to fully understand the pains and needs of its customers. Customers love feeling valued and important.
By offering exciting rewards and perks, not only will your existing customers stick with your brand, but you will also attract new customers. Furthermore, regaining the trust of an old customer is easier since you have access to such customer data, including purchase history and preferred communication channels.
Create Brand Advocates
Boosting your business’s customer loyalty program is something you should not overlook. Together with your company’s sales and marketing team, your existing customers could serve as brand advocates, promoting or marketing your business to their friends and families ━ and, in this case, for free.
Important customers are not only the ones willing to spend more money on your products or services. Those customers who refer your business to anyone they know is equally as important. Studies have shown that the majority of consumers place high trust in word-of-mouth recommendations from family or friends.
Increase in Sales
Customers loyal to your brand will buy more and are usually willing to spend more on your products or service. Admittedly, product or service price plays a significant role in a consumer’s purchasing decision. But with loyal customers, you no longer have to worry too much about competitors.
Loyal customers will always pick your product or service from the rest.
For this to happen, you need to establish a strong customer loyalty program. Your rewards should be in line with the needs and wants of your customers who frequently do business with you. Make use of your customer data to figure out what type of loyalty program will give out this desired effect.
Boost Brand Awareness
With a finer grasp of your customers’ and potential customers’ purchasing behavior, you can gather more relevant data and insights to help you with your marketing strategies. You can cut costs on unnecessary promotion and advertising techniques.
And, by providing excellent customer service with enticing loyalty rewards, more people will flock to your site and make significant purchases.
Considering all these reasons only cements the importance of having a strong customer loyalty program for your business.